Warren Buffett, the billionaire CEO of Berkshire Hathaway, expects even better times ahead for his company.
He also said that he knows who will one day replace him. Of course, Buffett did not share that name with the rest of us.
“The board and I believe we now have the right person to succeed me as CEO — a successor ready to assume the job the day after I die or step down,” he wrote in his latest annual letter to investors.
Buffett added that the next Berkshire CEO would be someone that already works at Berkshire and is “relatively young.”
This is Buffett’s 50th annual shareholder letter since he took control of Berkshire Hathaway in 1964. So it’s only natural that it’s time for Buffett to prepare Berkshire investors for life without him.
Throughout the past five decades, Buffett has had a lot to say about the financial markets, economy and society.
Last year, he even gave travel tips, urging people to consider flying to Kansas City, and then drive a rental to Nebraska, since airlines often have “jacked up prices” on flights to Omaha.
But most Buffett fans read the letters for his advice on stocks — even though Buffett has conceded that the portfolios run by his two investing lieutenants Todd Combs and Ted Weschler have outperformed his own lately.
Buffett is a classic buy and hold investor who has largely shunned pricey technology stocks in favor of blue chips in the financial, industrial and consumer sectors. He has often urged investors to not panic and dump stocks due to fear.
A constant Buffett refrain: Don’t bet against America. Better times lie ahead.
That optimistic spirit was once again present in this year’s letter. Buffett was particularly confident about the chances of continued success for Berkshire.
He said that “the chance of permanent capital loss for patient Berkshire shareholders is as low as can be found among single-company investments” and added that the there is “essentially zero” risk of Berkshire being hit by any major financial problems.
Buffett even joked that Berkshire would “always be prepared for the thousand-year flood” and “will be selling life jackets to the unprepared.” That’s a reference to some of the big investments Berkshire made in financial firms in the wake of the 2008 credit crisis.
But he added that Berkshire is now so big, it will be tough to match the performance of the past 50 years.
Buffett also stressed that the company is much more than an investing and insurance giant — and he hinted at more deals to come.
“Berkshire is now a sprawling conglomerate, constantly trying to sprawl further,” he wrote.
Still, some investors have questioned whether Buffett has lost his mojo. Big Berkshire investments IBM, Coca-Cola and American Express have lagged the market lately.
However, other Berkshire stocks — most notably top holding Wells Fargo — have done extremely well.
And Berkshire’s own stock has outperformed the S&P 500 over the past five years. The company is now the fourth most valuable in America, trailing only Apple, Google and Exxon Mobil.